United States
Wall Street began the week on a buoyant note, led by the technology sector as investors bet heavily on upcoming interest rate cuts from the Federal Reserve. The Dow rose 0.3 per cent, the S&P 500 gained 0.2 per cent, and the Nasdaq added 0.5 per cent, with heavyweight stocks like Nvidia, Microsoft, Amazon, Meta Platforms, and Broadcom all advancing. Broadcom stood out, extending a remarkable five-day rally to 20 per cent after another 3.2 per cent gain.
The optimism followed Friday’s weaker payrolls report, which showed slower hiring and unemployment at its highest level since 2021. That data, while pointing to softening labour conditions, increased confidence that the Fed will move to cut rates when it meets next week. The CME FedWatch Tool places the probability of at least a quarter-point reduction at 100 per cent, with a smaller chance—just under 12 per cent—of a half-point move.
Yet the tone among strategists remains cautious. Morgan Stanley warned that equities’ resilience to labour market weakness depends on how decisive the Fed’s monetary response proves to be. Similarly, JPMorgan’s trading desk suggested the forthcoming decision could spark a classic “sell the news” reaction if investor enthusiasm falters once cuts are delivered.
Meanwhile, gold extended its rally to a fresh record above US$3646 an ounce, driven by haven demand and lower yields. The US 10-year Treasury yield eased to 4.04 per cent, its lowest since early 2022. The VIX volatility index held steady at 15.11, underscoring relative calm despite the pivotal week ahead.
Europe
European shares closed higher, with the Stoxx 600 up 0.5 per cent, as investors digested political and sectoral developments. A looming confidence vote in France added some political uncertainty, but it was corporate moves that shaped the session.
Healthcare stocks were the main laggards, slipping after Morgan Stanley flagged ongoing risks tied to US policy changes. Heavyweights Roche, Novartis, and AstraZeneca dragged the sector lower, while Sanofi slipped despite a broker upgrade. By contrast, industrials and technology shares outperformed. Schneider Electric jumped 3.6 per cent, while Airbus climbed 2.2 per cent to a record high. VAT Group surged nearly 4 per cent on the back of an upbeat analyst note, while ASML and SAP also added solid gains. Banks joined the rally, with Santander and UniCredit advancing alongside Deutsche Boerse.
Energy shares firmed as Brent crude stabilised, up 1.1 per cent to US$66.20 a barrel, while miners traded mixed. Rio Tinto edged 0.3 per cent higher in Europe, though Glencore slipped.
Australia
Despite Wall Street’s upbeat finish, Australian shares are poised to open lower. Futures for the S&P/ASX 200 were down 28 points or 0.3 per cent at 8829, suggesting local investors will adopt a more cautious stance at the open.
On Monday, the benchmark closed at 8849.6, down 21.6 points or 0.24 per cent. Traders are weighing not only offshore leads but also domestic corporate updates. Companies trading ex-dividend today include CSL, BlueScope Steel, and Perseus Mining.
Stock-specific news will also influence sentiment. ANZ confirmed plans to cut up to 3500 jobs over the next year, highlighting cost pressures across the banking sector. Meanwhile, Macquarie Group announced a memorandum of understanding with Saudi Arabia’s Public Investment Fund for joint investments, underlining its continued global ambitions. In resources, Woodside Energy received a boost after Senegal raised its output forecast for the Sangomar oilfield.
Bond markets reflected global easing expectations. Australian 10-year yields slipped to 4.28 per cent, with three-year yields falling below 3.5 per cent. The softer tone in yields, combined with a weaker domestic growth outlook, leaves attention firmly on the Reserve Bank of Australia’s stance as global central banks shift gears.
Today’s local calendar features the Westpac consumer confidence survey at 10:30am and NAB’s business conditions and confidence reports at 11:30am, both of which could shape near-term market sentiment.
Commodities and currencies
Commodities had a dramatic session, led by gold, which surged to a record US$3,593.89 an ounce intraday before closing at US$3,586.69, up 1.2%. The precious metal has now risen 37% year-to-date, fuelled by central bank buying, geopolitical tension, and the hunt for safe havens.
Oil prices weakened as OPEC+ signalled output hikes from October, with Brent crude sliding 2.2% to US$65.50 a barrel. West Texas Intermediate dropped even further, down 2.3% to US$62.05.
Iron ore prices held firm, up 0.3% at US$105.15 a tonne, offering some support for local miners. Meanwhile, copper and other base metals were mixed as markets weighed slowing global demand against supply-side concerns.
Currency markets extended the recent rebound in the Australian dollar, which climbed 0.5% to US65.53¢. The local unit has now gained nearly 11% since its April low, when trade tensions spurred by Washington sent it tumbling. The euro also strengthened, up 0.6% to US$1.1718, while the yen gained 0.7% against the dollar.
Bitcoin was little changed, down 0.1% at US$110,229.1 in local trade but still comfortably above the US$110,000 mark. Other cryptocurrencies saw modest gains.
Economic Calendar
US:
- NFIB Small Business Optimism Aug 20:00
AU:
- Westpac Consumer Conf SA MoM 10:30
- NAB Business Conditions Aug 11:30
- NAB Business Confidence Aug 11:30
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
